Topic: INTERNATIONAL BUSINESS CONTRACT (Part 4)

MONDAY EXPORT CLASS

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GODWIN OYEFESO (SUCCESSEDGE EXPORTERS NETWORK)

Topic: INTERNATIONAL BUSINESS CONTRACT (Part 4)

HOW TO RESOLVE AND SETTLE DISPUTES?

Inclusion of Future Dispute Clause: While entering into export contract, suitable arbitration clause for referring the future disputes indicating the name of arbitrator, venue of arbitration and applicability of law may be incorporated to protect mutual interests. In case the arbitration clause is not included in the export contract, originally, a subsequent written agreement may be entered into, referring to the earlier contract. The later agreement is called ‘Submission agreement’.

Law for Enforcement of Foreign Awards in India

India is a party to International Conventions. Countries, which are members to the International Conventions, have to pass the necessary legislation for enforcement. Accordingly, Foreign Awards (Recognition and Enforcement) Act, 1961 has been passed.

Procedure for Enforcement in India: Any person interested in the award can pray the court, having jurisdiction, for filing the award. After giving notice to the parties why the award should not be filed, court pronounces the judgment according to the award, if the court is satisfied that the foreign award is enforceable under the above Act. Upon the judgment so pronounced, decree shall follow. No appeal can lie except when the judgment is in excess or not in accordance with the award.

Enforcement of Indian Awards in Foreign Countries

It is understood that awards made in India are enforceable in Foreign Countries, similarly, if the other country is a member of International Conventions. Where the other country is not a member of the International conventions or does not adhere to similar international regulations, enforcement of arbitration is beset with more difficulties.

Clean B/L: It indicates a clean receipt. In other words, it implies that there has been no defect in the apparent order or condition of goods at the time of receipt or shipment of goods by the shipping
Claused or Dirty B/L: It shows that the B/L is qualified which expressly declares a defective condition of The clause may state “bale number 5 hook-damaged” or “package number 10 broken”. By superimposing this type of clause, the shipping company is limiting its responsibility at the time of delivery of goods, at the destination. It is very important to note that bank accepts only a clean B/L at the time of negotiation.

(5)) Transshipment or Through B/L: When the journey covers several modes of transport from the place of starting to the place of destination, this type of B/L is taken. It indicates that transshipment would be en route. For example, part of the journey is by ship and the rest of journey may be by road, rail and air.

Stale B/L: According to international commercial practice, B/L along with other documents must be presented to the bank not later than twenty one days of the date of shipment as given in the B/L. In some cases, the importer may indicate the number of days within which the documents are to be presented from the date of Exporter has to comply with the stipulation indicated. Otherwise, the B/L becomes stale and is not accepted by the bank for payment. A stale bill is one which is tendered to the presenting bank so late a date that it is impossible for the bank to dispatch to the consignee’s place, in time, before the goods arrive at the destination port. In other words, bank finds it impossible to see the documents reach before the ship reaches the destination.
To Order B/L: In this case, the B/L is issued to the order of a specified
Charter Party B/L: It covers shipment on a chartered
Freight paid B/L: When the shipper pays the freight, then this type of B/L is issued with the words “Freight paid”.
Freight Collect B/L: When the freight on the B/L is not paid and to be collected at the point of destination, it is marked “Freight Collect” and this B/L is known as “Freight Collect B/L”.

Generally, the importer insists on the “clean on-board shipped” bill of lading with the prohibition of transshipment of goods as goods can suffer damage during transshipment. If transshipment is allowed, even period of journey may take longer.

B/L is a non-negotiable document: A bill of lading is not a negotiable document while it is a transferable document. Transferability enables the exporter to claim payment from the bank even before the goods reach the destination. Similarly, it enables the importer to sell the goods even before they reach the destination.

Parties mentioned in B/L: There are three main columns in B/L. These are shipper (consignor), consignee or order of and notifying party. Notifying party is party to whom notice is to be sent on the arrival of goods at the place of destination. When the B/L is made to the order of, the person, in whose name it is made to the order of, has the right to endorse further. To illustrate:

Consignor: Cherry & Co, Bhopal

Consignee or to the order of: Dimpy & Co, Newjersey, U.S.A. Notifying Bank: Bank of America, Newjersey

In this case, Dimpy & co has the total right for the cargo as the consignee. So, Cherry & Co can not transfer title to the goods to the third party. If payment of the goods is not received, consignor loses title to the goods and so B/L is not to be made in this way. However, where advance payment has been received or goods are shipped under irrevocable letter of credit, bill of lading can be made in the name of the consignee. In the normal circumstances, exporter takes the bill of lading to his order and endorses to the bank at the time of negotiation and in this way his interests are fully protected.

Who can lodge claim: B/L is the only evidence to file claim against the shipping company in the event of non-delivery, defective delivery or short delivery. If the importer makes payment, he can lodge the claim, as he will be in possession of negotiable copy of B/L. Otherwise, exporter can lodge the claim and receive the value of goods.

Contents of B/L

Name and address of the vessle
Name and address of the shipper
Name of port of loading
Date of loading of goods
Name of port of discharge and place of delivery
Quantity, quality, marks and other description
Number of packages
Freight paid or payable
Number of originals
Name of the shipping
Voyage number and date
Signature of the issuing authority

SIGNIFICANCE OF BILL OF LADING

Importance to the Exporter

It is an acknowledgment from the shipping company that the goods have been received for the purpose of shipment
After receipt of B/L, it helps him to send the shipping advice to the
If any damage occurs to the cargo during transit, he can hold the shipping company responsible, if he has received clean bill of
A copy of bill of lading is required to be attached to the application form to claim the incentives
It is a contract of carriage between the exporter (shipper) and the shipping

Importance to the Importer

It is a document of title to the goods, which enables him to transfer the tittle by endorsement and
The exporter can send a non-negotiable copy of B/L as advance intimation of shipment to the

3 It enables him to pay the freight amount as the B/L contains freight details.

Importance to the Shipping Company

It helps the shipping company to collect the freight amount from the exporter (CIF contract) or importer (FOB contract).
Shipping company can protect itself from the wrongful claims of exporter/importer by incorporating condition of goods/packaging, at the time of In case the shipping company, inadvertantly, omits to mention the advesrse conditon, at the time of receipt, advantage can be claimed by exporter/importer, by submitting wrongful claim.

(ii) Airway Bill

Airway Bill is also called Air consignment Note. It is a receipt issued by an airline for the carriage of goods. As each shipping company has its own Bill of Lading, so each airline has its own airway bill.

Airway Bill or Air consignment note is not treated as a document of title to goods and is not issued in negotiable form. Delivery of the goods is made to the consignee without the production of airway bill.

Importance of Airway Bill

It is a contract of carriage of goods between the consignor and airlines or his
It acts as a customs declaration
It contains details of freight and so works as a freight

(iii) Bill of Entry

Bill of Entry is a declaration form made by the importer or his clearing agent in the prescribed form under Bill of Entry Regulations, 1971 on the strength of which clearance of imported goods can be made.

When goods are imported into a country, customs duty has to be paid by the importer. For this purpose, importer prepares the Bill of Entry declaring the value of goods, quantity and description. This is prepared in triplicate. Customs authorities may ask the importer to produce the invoice of the exporter, broker’s note and insurance policy to satisfy about the correctness of value of goods declared.

For the purpose of giving information, goods are classified into three categories.

Free Goods: These goods are not subjected to any customs
Goods for Home Consumption: These goods are imported for self-consumption.
Bonded Goods: Where goods are subject to customs duty, till duty is paid, goods are kept in